Trust Deed or Sequestration

vandanfc

Hi all

Please can i ask for some pointers for some friends who have got themselves in a pickle.

Current situation is:

Couple in their 40's with 2 primary school age children. Unsecured debt of approx. £100,000. It looks like it will take about 12/13 years to pay this back via a DMP assuming everyone freezes interest/no extra charges are added.

Up until 6 weeks or so they owned a house, but sold to try and help their situation. Unfortunately selling the house has actually not improved things at all. They are now in rented accom. for the foreseeable future.

A trust deed was suggested, but the husband would not consider it. Now finally though he has agreed to go with a trust deed.

My opinion is that there is no point in doing this now, and that in reality they should either stick with a DMP or a DPP as has now been suggested or go down the bankruptcy/sequestration route.

Any thoughts on this matter would be welcome.

fermi

For some reason, most of the people who come onto this forum are from England where insolvency law and practice is different to that in Scotland.

We occasionally get a few people from north of the border, but it can be a long wait for a reply.

I would suggest that you take a look at (and consider posting on) the following forum that has a whole section about "Debt in Scotland". Trust Deeds/Sequestration are a regular/main topic in that sub forum.

http://www.debtquestions.co.uk/debt_forum/

Homework

www.aib.gov.uk

There are PDF leaflets giving information about everything.

Trust Deed they enter into an agreement with a trustee that they will pay so much for so long. It is published in the Edinburgh Gazette and the creditor has 5 weeks to object. If the majority of the creditors object then it can't go ahead. If it goes ahead and you miss payments then the trustee will normally make you bankrupt for their fees which will exceed £1500. Normally the fees are deducted from the payments you make and the balance is made to creditors. If you don't make the payments then they have to get them back like this.

Sequestration you need to have a Charge for Payment from a creditor to say they are taking you to court. If you don't have one of these then the application will not proceed. Many people are stuck in limbo as the creditors will not make them bankrupt but they cannot make themselves bankrupt without this Charge for Payment. If you have one you can complete the form at court and pay £71 (unless in receipt of certain benefits) sending on a copy to the Accountant in Bankruptcy. The Sheriff will award it within days if it is all in order. (You have to owe over £1500 in total)

In Scotland there is the Debt Arrangement Scheme which will give you as long as possible to pay things back and protects you from Bankruptcy. You cannot be sequestrated if you have an arrangement to go into a Debt Arrangement plan and you do that through a Money Advice worker who are at the local council offices. Your name is not printed in the Edinburgh Gazette if you do this. www.moneyscotland.gov.uk

Hope this helps

Payplan and CCCS will give excellent advice too.

vandanfc

Thank you so much, this info really helps. I believe that they are about to start on the debt arrangement plan thing. From you have said this is probably the best way for them to go. the Trust Deed just doesn't seem relevant anymore.

Thanks so much for pointing me in the right direction.

Homework wrote: »

www.aib.gov.uk

There are PDF leaflets giving information about everything.

In Scotland there is the Debt Arrangement Scheme which will give you as long as possible to pay things back and protects you from Bankruptcy. You cannot be sequestrated if you have an arrangement to go into a Debt Arrangement plan and you do that through a Money Advice worker who are at the local council offices. Your name is not printed in the Edinburgh Gazette if you do this. www.moneyscotland.gov.uk

Hope this helps

Payplan and CCCS will give excellent advice too.

Homework

Hope it all goes well.

Get them to take as much information as possible and make sure they are comfortable with the payments. They cannot be sequestrated while they make the agreed payments but if they start defaulting the creditors can apply to court.

The Trust Deed has an advantage as if agreed they may not have to pay back all the debt. As long as they make all the repayments.

Debt Arrangement would allow them to repay their debt over a long period of time.

A Money Advice Worker should be able to go through it all and work out the best way to go. Best thing is when they have got this worked out they have a chance to live again without the pressure of the debts building up all the time.

Homework

I missed the point that in Scotland you are still bankrupt for 3 years. It is changing but hasn't yet.